2. MANAGEMENT
INFORMATION SYSTEMS
•Introduction
•What is MIS?
•Objectives, Decisions and
Information
•Levels of Decision Making
•Strategic Decisions
•Tactical Decisions
•Operational Decisions
•Management Uses of
Information
•Planning
•Control
•Qualitative
Characteristics of
Information
•Relevance
•Timeliness
•Accuracy
•Verifiability
•Data or Information
Processing
•Scheduled Reports
•Demand Reports
•Exception Reports
•Predictive Reports
•The MIS and Business
•The MIS and Data-Base
Management Systems
•Decision support Systems
•The Impact of
Management Information
Systems on Business
•Easier Business growth
•Fewer Clerical Workers
•Reduced Information-
Processing Costs
•Automation of Some
Decisions
•More and Better
Information
Chapter Outline
3. Managers see computers as tools for
providing information on which to base
their decisions.
People who are successful with
computers know that when developing
computer applications they should first
focus on their information needs rather
than on hardware technology.
4. What they need most is conceptual
knowledge about the information
requirements of management and the
methods for converting these often
complex requirements into operational
computer software.
5. What is a MIS?
A management information system is a
formalized computer information
system that can integrate data from
various sources to provide the
information necessary for management
decision making.
6. What is a MIS
The data-processing system supports
management information systems. Much of
the information that the MIS uses is initially
captured and stored by the data-processing
system.
Data processing is oriented toward the
capture, processing and storage of data
whereas MIS is oriented toward using the
data to produce management information.
7. What is a MIS
The data-processing system performs
transaction processing. It is very much
involved with processing orders, sales,
payments on account, and so on. In the
course of processing these transactions, the
data-processing system collects and stores a
large amount of detailed information. This
information is the data base for the
management information system.
8. What is a MIS
Management Information Systems
Characteristics
•Oriented toward decision making
•Summary information
•Medium and long range
•Periodic
•Prediction and control oriented
Data Processing
Characteristics
-Performs Transaction Processing -Detail Data -Short Range -Realtime
-Daily Operations Oriented
•The Relationship between Data Processing and Management Information Systems
9. Levels of Decision Making
Decisions can be classified as;
Strategic
Tactical
Operational
These levels of decision making also
correspond to management levels. Strategic
decisions are made by top management;
tactical decisions by middle management;
and operational decisions by lower-level
management.
10. Levels of Decision Making
Strategic decisions are future oriented
and involve a great deal of uncertainty.
Strategic decision making involves the
establishment of objectives for the
organization and the long range plans for
attaining these objectives. Decisions
regarding the location of plants, and
decisions about capital sources about
which products to produce, are examples
of strategic decisions.
11. Levels of Decision Making
Tactical decision making is concerned
with the implementation of the decisions
made at the strategic level. This
includes the allocation of resources to
the pursuit of organizational objectives.
Examples of tactical decision making
include plant layout, personnel
concerns, budget allocation, and
production planning.
12. Levels of Decision Making
Operational decisions involve the
execution of specific tasks to assure
that they are carried out effectively and
efficiently. These decisions are made
primarily by lower-level supervisors.
Standards are usually preset for
operational decisions..
13. Levels of Decision Making
Managers and supervisors at this level are
expected to make decisions that keep the
operation in line with predetermined
standards. Examples of operational decision
making include acceptance or rejection of
credit in a personal banking or an employee,
determination of inventory reorder times and
quantities, and assignment of jobs to
individual workers.
14. Levels of Decision Making
Programmable decisions are those
decisions for which policy standards or
guidelines are already established. For this
reason they are often called structured
decisions. These decisions are routine in
nature and can be made reference to
previously established policy.
An example of a programmable decision is
the credit-granting decision based on income,
years employed, et cetera of the individual
applying for credit.
15. Levels of Decision Making
Note that programmable decisions are made
by lower-level managers or supervisors.
Non-programmable decisions deal with ill-
defined and unstructured problems. These
decisions are future oriented and contain
many variables whose impact on the outcome
cannot be quantified. These unstructured
decisions are those regarding plant
expansion, new products and mergers.
16. Levels of Decision Making
Strategic
Level
Decisions
Data Processing
(Transaction Processing)
Operarional-Level Decisions
Tactical-Level Decisions
Levels of Decision Making
17. Levels of Decision Making
In our discussion of levels of decision
making, we touched on some of the
characteristics of the information
required at each level of decision
making. Next table summarizes these
characteristics. Most of the entries in
this table are self-explanatory.
18. Levels of Decision Making
Characteristics of the Three Levels of Decision Making
Levels of Decision Making
Characteristic Operational Tactical Strategic
Problem Variety Low Moderate High
Degree of Structure High Moderate Low
Degree of Uncertainty Low Moderate High
Degree of Judgement Low Moderate High
Time Horizon Days Months Years
Programmable Decisions Most Some None
Planning Decisions Few About half Most
Control Decisions Most About half Few
19. Levels of Decision Making
However, we should look closely at some of
them such as the use of realtime information.
Operational decision making depends heavily
on realtime information.
For example, our school uses a realtime
system for course registration. The
operational decision allow you to sign up for a
particular class depends on the realtime
information whether the class is full or not.
20. Levels of Decision Making
On the other hand, strategic decision
making depends much less realtime
information. For instance, one important
type of information used at the strategic
level is income statements. These
statements are usually generated at the
end of each month. Therefore, they are
not realtime.
21. Levels of Decision Making
Strategic-level decision making also tends to
rely heavily on financial information. Decision
makers at this level deal with capital
requirements and profitability in dollars.
On the other hand, a frontline supervisor is
more concerned about the hours worked on a
job, the number of orders shipped, the
number of defective units produced.
22. Characteristics of Information Required at Each Level of Decision Making
Levels of Decision Making
Information Characteristic Operational Tactical Strategic
Dependence On Computer
Information Systems
High Moderate High
Dependence On Internal
Information
Very High High Moderate
Dependence on External
Information
Low Moderate Very High
Degree of Information
Summarization
Very Low Moderate High
Need For Online Information Very High High Moderate
Need For Computer Graphics Low Moderate High
Use Of Real time Information Very High High Moderate
Use Of Predictive Information Low High Very High
Use Of Historical Information High Moderate Low
Use Of What-If Information Low High Very High
Use Of Information Stated In
Dollars
Low Moderate High
23. Qualitative Characteristics
of Information
Relevance
Information has relevance when it is
useful in decision making. In other
words, if information improves the
decision, it is relevant.
24. Qualitative Characteristics
of Information
Timeliness
In the context of most management
information systems, as information value
becomes older its value decreases.
Generally lower level decisions in an
organization must have more current and
timely information and as we move up
ladder to higher-level decisions the
information can be somewhat older.
25. Qualitative Characteristics
of Information
Accuracy
Accuracy refers to information being free of
error. The amount of error that we can
tolerate is related to the other factors,
especially timeliness and the dollar value of
the decision to be made. If a decision maker
must make a decision quickly, a greater
degree of error can be tolerated than if he or
she has considerable time and resources
available to reduce error.
26. Qualitative Characteristics
of Information
Verifiability
Verifiability means that the accuracy of
information can be confirmed. Information
can be verified through comparison with other
information that is known to be accurate.
29. Qualitative Characteristics
of Information
The term audit trail is often used to describe
the means by which summarized information
can be traced back to its original source. This
audit-trail is a very important part of any
information processing system. Without this
trail it is usually impossible to determine the
accuracy of information, therefore bringing in
to question the usefulness of such
information.
30. Data or Information
Processing
Data are collected facts that generally
are not useful for decision making
without further processing. Information
is directly useful in decision making. It is
based on processed data therefore is
the output of a data-processing system.
31. TYPES OF REPORTS in MIS
Report: A printing or display of items.
Scheduled (Regular) Reports
Demand (Query) Reports
Exception Reports
Predictive Reports
32. Scheduled Reports
Scheduled Reports are produced on a
regularly scheduled basis such as daily,
weekly, or monthly.
These reports are widely distributed to
users and often contain large amounts
of information that are not used
regularly.
33. Exception Reports
One of the most efficient approaches to management is
the management by exception approach. Management
by exception means that managers spend their time
dealing with exceptions or those situations which are
out of control.Activities that are proceeding as planned
are in control and, therefore , do not need the
manager’s attention.
Exception reports notify management when an
activity or system is out of control so that corrective
action can be taken.
34. Exception Reports (continue..)
Listings that identify all customers with
account balances that are overdue are
examples of exception reports.
Error reports are another type of exception
reports. Error reports identify input or
processing errors occurring during the
computer’s execution of a particular
application.
35. Demand Reports
Demand reports are generated on request. These
reports fill irregular needs for information.
In the earlier days of computing, the contents of a
demand report had to be previously anticipated or there
was a delay of often weeks or months in receiving the
data.
Today, largely through the query languages of database
management systems, we can fulfill unanticipated
demands for information very quickly.This is possible
because users and managers can use query languages
to produce reports.
36. Predictive Reports
They are useful in planning decisions. They often
make use of statistical and modeling techniques such
as regression, time series analysis, and simulation.
These reports assist management in answering what-
if questions. For example: What if Ad increased by
10% ?
The statistical and modeling techniques that produce
predictive reports depend largely on historical data.
Such data must be accessible by the MIS in a form
that can be used by the models; otherwise, these
models will be little use to management.
37. Scheduled
(Regular)
Reports
Demand
(Query)
Reports
Exception
Reports
Predictive
Reports
- Produced on a regularly scheduled basis.
- Daily, weekly, monthly
- Widely distributed to users
- Generated upon request.
- Easily produced with query languages.
- Fill irregular needs for information.
-Notifies management of out-of control situations.
- Periodical
- Error listings
- Edit listings.
- Assist management in answering what-if questions
- Produced by statistical and modeling programs
- Useful in planning
38. MIS REPORTS FOR SALES
DEPT.
R: WEEKLY SALES REPORT
E: WEEKLY COMPLAINTS ABOUT
SALES
Q: WHAT IS THE SITUATION OF
CUSTOMER A?
P: NEXT YEAR’S SALES
39. Weekly Deliveries Report Report Date:4.1.17 Time: 11:02 Page:
1/6 Week No:5
Customer Name Prod.Code Quantity Price Unit Amount Delivery Date
XYZ 315 29 10 KG 290 2.1.17
XYZ 433 10 15 KG 150 3.1.17
.
.
.
-----------------------------------------------------------------------------------
COUNT : 2
AVERAGE 19.5 12.5
TOTAL 440
40. The MIS and Business Functions
A MIS is a federation of functional information
system.
Specialists within each of the functional areas
such as finance, production, accounting, or
engineering are much more familiar with the
information requirements of that function than
anyone else in the firm. These specialists can
design systems to produce the information
required to manage their function.
41. Database management systems greatly enhance the ability of these functional systems to share the same
data. The important point to remember is that these integrated functional information systems are the MIS.
The MIS as a Federation ofFunctionalInformation Systems
Marketing Information System Finance Information System
Accounts Receivable Accounts Payable
Data Editand Balance MasterFile Update Payroll-Check Generator LaborDistribution ReportGenerator
Payroll Fixed AssetAccounting GeneralLedger CostAccounting
Accounting Information System Production Information System Engineering Information System PersonnelInforma
MIS
ctional
rmation
stems
ccounting
pplication
Systems
Payroll
Programs
42. The MIS and Data-Base Management
Systems
Data are the central resource of MIS.
A data-base management system is a program that
serves as an interface between applications programs
and a set of coordinated and integrated files called a
data base.
There are many opportunities for functional information
systems to share the same data. For instance, the
payroll application within the accounting information
system could share data with the personnel information
system. Examples of data that could be shared are
employee names, addresses and pay rates.
44. Decision-Support Systems and the MIS
A decision-support system provides a set of
integrated computer tools that allow a decision
maker to interact directly with computers in order
to retrieve information useful for semi structured
and unstructured decisions. Such decisions
might involve plant expansion, mergers,
acquisitions, or new products, for example.
45. Decision-Support Systems and the MIS
A decision-support system is an extension of a
MIS. It provides user-friendly languages, data
retrieval, data processing, and modeling
capabilities for the decision maker’s direct use.
Integrated form of electronic spreadsheets,
database management, and graphics allows
user’ s to react quickly to the changing
information needs that usually go along with
unstructured decisions. Asprova, Icron Prod.pln.
46. The Impact of Management Information
Systems on Business
All businesses, whether large or small must perform
data processing.
Since a small- business manager is very familiar with
all the aspects of the business, there is less need for
a formal data-processing system.
As a business grows larger, managers depend much
more on data-processing systems for their
information.
47. A business simply could not service its customers or
make higher level decisions without information to
support customer service and decision making.
The use of computers in information processing has
had several impacts on business:
easier business growth
fewer clerical workers
reduced data- processing costs
automation of some decisions
availability of different types and greater quantities of
information.
The Impact of Management Information
Systems on Business
